The cryptocurrency lending platform, Celsius Network, has a gap of approximately 1,200 million dollars in its balance, with most of the liabilities owed to its users. In addition, the company has filed for bankruptcy protection, so his future looks bleak.
Even so, the valuation of Celsius Network’s native token CEL has soared by more than 4,100% in the past two months, reaching around $3.93 on August 13, compared to its mid-June low of $0.093.
By comparison, hehe major coins, Bitcoin (BTC) and Ether (ETH), are up 40% and 130% in the same period.
Acquisition Rumors Behind CEL Rise?
Technically, price rally turned CEL into an overvalued token in early Augustwhen its relative strength index (RSI) exceeded the threshold of 70.
The Takeover rumors seem to be behind CE’s bullish strengthL. In particular, Ripple wants to buy the assets of Celsius Networkaccording to an anonymous source quoted by Reuters on August 10.
Reuters reported that Ripple is interested in Celsius assets but there’s no confirmation yet from either companies. Celsius has halted withdrawals from the platform since June and has filed for Chapter 11 bankruptcy which will enable them gradually payback what they owe.
— Tajo Crypto (@TajoCrypto) August 10, 2022
Reuters reported that Ripple is interested in Celsius assets, but there is no confirmation from either company yet. Celsius has halted withdrawals from the platform since June and has filed for Chapter 11 bankruptcy that will allow them to gradually repay what they owe.
CEL’s price more than doubled after the news broke.
Rumors also surfaced in July about Goldman Sachs’ intention to acquire Celsius Network for $2 billion.. At the time, CEL was trading as low as $0.39.
Short squeeze on CEL prices
An army of retail traders also appears to be behind CEL’s gigantic bull run over the past two months..
Some traders have organized a short squeeze or bullish contraction to limit the bearish perspectives of the CEL. A short squeeze is when the price of an asset rises suddenly, forcing short sellers to buy the asset back at a higher price to close their positions.
Bitcoin & Celsius Update
BTC is very choppy so my focus is on altcoins & CEL. I’d like btc to hold 22k for bullish bias. Cel wants breakout again, Iam looking to buy more above 2.6 with #CELShortSqueeze army behind it, could CEL pump to $3 next?
LIKES/RETWEETS APPRECIATED pic.twitter.com/5axZiwcl1Q
— WSB Crypto Mod (@traderrocko) August 12, 2022
bitcoin and celsius update
BTC is very choppy so my focus is on altcoins and CELs. I would like btc to hold $22k to have a bullish bias. CEL wants to break again, I’m looking to buy more above $2.6 with the #CELShortSqueeze army behind it, could CEL pump to $3 next?
It is possible to create a short squeeze due to the decrease in the circulating supply of CELmainly due to the freezing of Celsius Network token transfers.
Curiously, FTX held about 5.1 million CEL tokens on August 13, about 90% of all total circulation on exchanges. Meanwhile, the number of open short positions on the exchange was about 2.66 million CEL, up from a monthly high of 2.96 million CEL on August 11.
In other words, short traders have closed around 300,000 CEL positions in just two days.
What’s next for the Celsius token?
History shows that short squeezes are difficult to hold for a long period of time.
These perspectives make CEL is at risk of facing an extreme correction in the coming weeks or months. As stated, the token is already overbought, adding to the bearish outlook.
Plotting a Fibonacci retracement chart from the $6.5 high to $0.39 low yields interim support and resistance levels for CEL. In particular, the token is now indicating a break above its 0.618 Fibonacci line (approximately $4.21), with its upside target at $5.25, 45% from today’s price.
On the contrary, A break below the support level at the 0.5 Fib line (roughly $3.48) risks the CEL heading towards $2.7525% below the current price level.
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